Lonias Ndlovu, University of Zululand, KwaDlangezwa, South Africa.

Transcription

1 South African Patent Law and Access to Medicines Lonias Ndlovu, University of Zululand, KwaDlangezwa, South Africa 1 Introduction NdlovuL@unizulu.ac.za In South Africa, the common forms of intellectual property are trademarks, copyright patents and designs. Other forms of intellectual property such as geographical indicators, trade secrets and plant breeders rights are also recognized in South Africa. South Africa is a member of the Southern African Development Community (SADC), African Union (AU) and the World Trade Organisation (WTO), and by extension the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). As a member of SADC, the AU and the WTO, South Africa has obligations she must perform in order to protect intellectual property rights. It is common cause that the South African patent legislation is not without its glaring weaknesses. 1 Major weaknesses have been attributed to the absence of an examination system, some TRIPS-plus provisions, the absence of pre and post-grant opposition procedures for patent applications, a weak definition of novelty which allows ever greening and the absence of an express provision dealing with parallel imports in the relevant legislation. 2 In the specific context of access to medicines, evergreening, which is cited as the major contributor to high drug prices due to the fact that it prevents the entry of generics into the market, has been brandished as one of the major weaknesses of the Patents Act. Other weaknesses cited are weak provisions relating to parallel imports and compulsory licenses. It has often been argued that should South Africa address these and other problems to be outlined below, South Africans will realize their right to health, succinctly spelt out in section 27 of the Constitution. 3 A revised version of this paper was presented at SASPAM Legal Advisors meeting which was held a Lakes Hotel, Benoni South Africa from September See for instance Laura Lopez Gonzalez Evergreening Keeps Products Costly: Patents review Proposal Could Slash drug Prices Cape Times, 10 September 2013 pg 4. 2 This last complaint is somewhat misplaced and not entirely true because with specific reference to medicines, section 15(c) of the Medicines and Related Substances Control Amendment Act of 1997 does provide for the parallel importation of medicines, albeit in a roundabout and incoherent manner. 3 Constitution of the Republic of South Africa 1996.

2 This paper s main aim is to identify the major weaknesses in South African patent law in as far as they relate to access to medicines Secondly, and perhaps most importantly, propose solutions to the problems identified. Despite the fact that South has reacted to criticism of her patent law by passing a new Policy on Intellectual Property, 4 a discussion of the new policy is beyond the scope of this paper. The paper closes with a brief outline of some aspects of the law that must be attended to in order to appropriately amend the Patents Act and improve access to medicines for South Africans. 2. Scope and Methodology The paper begins with an overview of the South African Law of patents, delineating the legal requirements for an invention to subsist. It then examines the commonly cited weaknesses of South African patent law which are likely to have an adverse impact on access to medicines before coming up with possible solutions. The final section then draws conclusions, makes recommendations and points out areas for further attention to be tackled by a revised version of the draft IP Policy or amendments to the current Patents Act. The paper makes extensive use of both primary and secondary sources of information but does not base its findings on interactions with various key players and resource persons in government institutions, civil society and Non-Governmental Organisations (NGOs) at the national level. However some of the views of government and other key stakeholders which have been documented were perused and informed some of the conclusions the paper draws. The primary sources of information that were consulted include South African legislation, regulations, the draft IP policy and treaties, policy documents and legal texts of the SADC, AU and WTO. Key secondary sources of information were judicial decisions of the South African courts, WTO panel and Appellate Body rulings, newspaper articles, expert opinion writings, journal articles and textbook sources. The paper was prepared under considerable time constraints, making it difficult to provide detailed information in some instances. A concise but accurate account of the information/legal or policy position was however given and it is envisaged that this will be sufficient for the present purpose. 4 The full text of the draft Policy is available at (last visited 30/09/2013).

3 3. South African Patent Law Generally The current law regulating patents is encapsulated in the Patents Act, 5 Patents Amendment Act 2005, 6 Intellectual Property Laws Amendment Act 7 and the Regulations. 8 With respect to patents on medicines, it is important to add that the Medicines and Related Substances Control Amendment Act 9 is also a relevant piece of legislation. A patent is defined as a certificate in the prescribed form stating that a patent has been granted in South Africa for an invention. 10 The Patents Act and the accompanying Regulations, grants patents for 20 years for new inventions that involve an inventive step and are useful in industry, trade and agriculture after the applicant has complied with the formal requirements spelt out in the Act. The law gives the inventor an exclusive right to exploit (also recover manufacturing and marketing costs) and prevent others from hijacking his ideas for a limited period (20 years), after which it (invention) becomes available to anybody wishing to exploit it. The Patents Act enhances transfer of new technology by registration, disclosure and documentation of the patented invention in a wellestablished system, for protection of inventions. An invention entails novel ideas as documented (outwardly expressed), i.e. something that did not exist before and which usually offers a solution to a problem. 11 In the Patents Act, an invention means an invention for which a patent may be granted under section The South African Patents Act covers the following issues relating to patents, which are relevant to access to medicines: 13 definitions of 5 Act 57 of 1978, which came into operation on 1 January Patents Amendment Act 20 of Intellectual Property Laws Amendment Act of The First Regulations to the Patents Act were published on 15/12/ Act 90 of See on a related note Theresa June Chung Shocking the Conscience of the World: International Norms and the Access to AIDS Treatment in South Africa (2002) essay submitted in partial fulfillment of the Requirements for a Juris Doctor Degree, Harvard Law School at Section 2 of the Patents 57 of That an invention is not new if there is anticipation of it was confirmed in the following South African Appellate Division cases: Netlon v Pacnet SA 840 (A) ; Letraset v Helios SA 245 (A); Gentiruco AG v Firestone SA 589 (A); Marine Constr & Design v Hansen's Marine Equipment SA 181 (A). 12 Section 2 of the Patents Act. This definition is with all due respect unhelpful because it leaves the reader not close to the meaning of invention. 13 It should be noted that the Act covers other issues such as international applications under the Patent Cooperation Treaty, patent agents and patent attorneys etc., but these are not discussed in this paper because they are not directly relevant to the theme of access to medicines.

4 important terms; 14 use of the invention by the Minister of state for a public purpose; 15 administration issues relating to the registration of patents 16 and inspection of the register; 17 publication of patents in the Patents Journal; 18 requirements for patentability and related matters; 19 examination of applications and specifications; 20 notice and publication of acceptance of complete specification; 21 Inspection by public; 22 the grant, 23 duration 24 and effect of patents; 25 licences generally including compulsory licences (emphasis added); 26 revocation of patents; 27 patent infringement; 28 the bolar 29 exception 30 and acquisition of rights to inventions and patents by the state. 31 Despite the presence of the above provisions in the relevant legislation, South Africa has not taken advantage of the law to improve access to medicines and fully realise the right to health for its citizens. Most of the provisions which are outlined above as sympathetic to access to medicines have been criticised as ineffective in practice due to lack of detail and the absence of administrative and political will to implement them. It is now appropriate to turn to an outline of the commonly cited problems and others that have been overlooked in common critiques of the Patents Act. 4. Weaknesses/Problem Areas The generally cited problems with patents in South Africa are outlined briefly below. This paper first identifies problems that have been cited by critics of the law from civil society organizations and academic 14 Section 2 of the Patents Act. 15 Section 4 of the Patents Act. 16 Section 7 of the Patents Act. 17 Sections of the Patents Act. 18 Section 14 of the Patents Act. 19 Section 25 of the Patents Act. 20 Section 34 of the Patents Acts. 21 Section 42 of the Patents Act. 22 Section 43 of the Patents Act. 23 Section 43 of the Patents Act. 24 Section 46 of the Patents Act. 25 Section 45 of the Patents Act. 26 Sections of the Patents Act. 27 Sections of the Patents Act. 28 Sections of the Patents Act. 29 The Bolar amendment gets its name partly from the US Court of Appeals for the Federal Circuit case of Roche Products, Inc. v Bolar Pharmaceutical Company. This case decided that testing of a medicine for the purpose of drug regulatory authority approval could not take place before the patent had expired. This led to an amendment of the relevant law in Section 69A of the Patents Act. 31 Section 78 of the Patents Act.

5 institutions. Secondly, it adds other weaknesses which civil society activists and members of the academia have previously omitted to highlight. The first common criticism has consistently been that South Africa has a depository system for patent applications hence very weak patents may be granted because the patents office does not and cannot conduct substantial technical assessments of prospective inventions; one only has to do the correct paperwork 32 and a patent will surely be granted. While this criticism is fair by all accounts, it does not seem to take into account that section 34 of the Patents Act provides for substantive examinations of patents. The problem is therefore not with the patents legislation but rather with the administrative process within the office of the Registrar of Patents, whose officers seem to be defying the prescriptions of the Act with impunity. The second point of criticism is that South Africa is lagging behind and has not amended its laws to take advantage of TRIPS flexibilities by amending its patent law to incorporate or implement the flexibilities. 33 This criticism is fair enough. For example, there is no provision dealing with parallel importation in the Patents Act; and it is not easy to say precisely which patent exhaustion regime South Africa adheres to. The third point of criticism is based on fact that South Africa hands out an excessive number of pharmaceutical patents because the patentability criteria is not very strong and this promotes evergreening and the issuance of unnecessary secondary patents. 34 It is reported that in 2008 alone, South Africa granted 2442 patents, while in sharp contrast, Brazil only granted 278 patents between 2003 and Granting evergreen patents in turn leads to a delay in the entry of generic medicines into the South African market. A classic example of the problem is illustrated by the fact that a patented version Novartis drug imatinib, used to treat a cancer costs R per year for a patient in the absence of generic competition. When the patent on the drug expired in April 2013 in South Africa, a generic version of the drug could not be introduced because Norvatis had meanwhile obtained an additional new use patent for the same drug, and this patent will only lapse in This problem will be easy to solve if South Africa amends the provisions in the Patents Act 32 See Vuvu Vena Revised Policy will Increase Access to Latest Medicines Daily Dispatch, 16 September 2013 pg See TAC and MSC Memorandum: DTI must urgently Fix Patent Laws to Improve South Africans Access to Medicines Memorandum to the South African Minister of Trade and Industry, Mr. Rob Davies dated 7 August Ibid at 1-2.

6 dealing with patentable inventions 35 by setting higher standards for novelty. 36 It has been submitted as a fourth point of criticism that the South African patents office does not function in a transparent manner and the status of pending applications and those that have been granted is not always clear. The database should be appropriately populated and information on pending and granted patents must be easily available and accessible to the public through publication in an accessible medium such as local newspapers. I embrace this criticism and submit that it is fair. Closely related to the fourth point above is the fact that in South Africa, there is no provision for pre and post grant patent opposition from a wide range of third parties. If pre and post grant opposition is allowed in the patent application process, evergreen patents and those that have been rejected in other jurisdictions may be eliminated. India does provide for pre and post grant opposition to patents; 37 Brazil is likely to adopt the same procedure soon. 38 Finally, it has been argued that despite providing for compulsory licenses in South African patent law, the relevant provisions are onerous and difficult to enforce through litigation. 39 Compulsory licenses, which are also provided for in the TRIPS Agreement 40 and the Paris Convention, 41 are not defined but will involve an entity or individual that has failed to obtain permission from the right holder asking for an order from the courts or government authorities giving the sought permission on condition that royalties be paid to the right holder. 42 In situations of 35 Section 25 of the Patents Act. 36 The TRIPS Agreement in Article 27 thereof sets the minimum standard and members are free to define an inventive step in their own way that suits their own national standards. 37 See MSF website Why the Indian Supreme Court Ruling on Norvatis Matters to South Africa available at (9/19/2013). The pertinent legal provision is section 3(d) of the Indian Patents Act, which the Indian Supreme Court had the occasion to apply in the leading case involving Norvatis drug Glivec, which the Supreme Court held to be no more than a new version of an old medicine, which did not provide significantly enhanced therapeutic benefit. 38 See Centre for Strategic Studies and Debates Brazil s Intellectual Patent Reform: Innovation Towards National Competiveness (2013) Additionally, in Brazil, it is required that a health authority be informed of all pending applications that may adversely impact on health. 39 See section 56 of the Patents Act. 40 See Articles 7, 8, 31 and 40 of TRIPS. 41 Per Article 5 of the Paris Convention. 42 Alexander G. Watson International Intellectual Property Rights: Do TRIPS flexibilities Permit Sufficient Access to Affordable HIV/AIDS Medicines in Developing Countries? (2009) 32 Boston College International and Comparative Law Review at 148.

7 national emergency however, the user is not obliged to make an initial attempt to secure a voluntary license. 43 In South Africa, public interest grounds for compulsory licenses must be included and expanded so that the country can take advantage of the exceptions to patentability 44 and the grounds for granting compulsory licenses, 45 including anti-competitive practices, 46 as provided for in the TRIPS Agreement. It is important to point out that while the new draft IP Policy identifies the use of compulsory licenses as a panacea for access to medicines in South Africa, it does so in an incoherent and sometimes inaccurate manner. The policy creates the impression that compulsory licenses for the manufacture of generics can only be issued once the patent has expired. This is far from the truth since section 56 does make an express mention of compulsory licenses of abuse. The draft policy also refers to pandemics which will necessitate a resort to compulsory licenses. This again is inaccurate because the TRIPS list of situations leading to a national emergency is not limited to pandemics; members are free to determine what amounts to a national emergency in each specific context. 47 While section 56 remains a laudable legislative inclusion in the context of access to medicines, it is encumbered by two legally difficult provisions. 48 Firstly, the applicant must be able to show that he/she has an interest in the matter. 49 It is doubtful if a civil society organization like MSF and TAC will satisfy the interested person test, since in all likelihood an interested person must be in the business of drug manufacture or import. Secondly, the applicant must show that the rights in a patent are being abused. 50 The section sets out a number of instances when patent rights will be deemed to be abused. 51 Since there are no interpretive 43 Ibid. 44 Article 30 of TRIPS. 45 Article 31 of TRIPS. Although the word compulsory license does not appear in the TRIPS Agreement, the WTO has stated that the practice falls under the broad heading of other use without authorization of the right holder (see WTO fact sheet TRIPS and Pharmaceutical Patents, Sept. 2006, (21/09/2013). 46 See Article 31 (k) of TRIPS. 47 See Article 31(f) of TRIPS. 48 See Section 56(1) and 56(2) of the Patents Act. 49 Section 56(1) of the Patents Act. 50 Section 56(2) of the Patents Act. 51 E.g. if the patent holder is not satisfying demand on a reasonable scale. The list is not closed from a reading of the pertinent provision.

8 inferences emanating from the wording of the provision implying that the list is a closed one, it is submitted that the law be reformed to accommodate more grounds for compulsory licenses. 52 Because South Africa presently relies on both domestically produced and imported medicines, compulsory licenses, either for local production or for importation are likely to come in handy. Section 56 of the Patents Act has been criticized as TRIPS-plus, because it provides greater patent protection than what the TRIPS Agreement requires. The section is also labeled as user-unfriendly for people who lack access to medicines. To date, the section has not been used in real litigation but yielded positive results in 2003, when the Generic Antiretroviral Procurement Project and the TAC Treatment Project threatened to sue Boehringer Ingelheim under the same section in order to acquire compulsory licences to import generic nevirapine products. To avoid litigation, Boehringer Ingelheim agreed to issue royalty-free voluntary licenses to the two projects, thus avoiding protracted litigation and unfortunately thwarting the grant of the first court-issued compulsory license. Apart from the above-mentioned weaknesses of the South African Patents Act, there are others which have not had their share of criticism despite deserving such criticism. The weaknesses relate to parallel imports; the provisions dealing with revocation of patents; government use of patents; acquisition of patents by the state and the fact that South African patent law does not seem to embrace the research exception to patentability directly. Parallel importation means the import and resale in a country, without the consent of the patent holder, of a patented product that has been legitimately put on the market of the exporting country under a parallel patent. 53 Parallel importation is an important tool enabling access to affordable medicines because there are still substantial price differences for pharmaceutical products in different markets. 54 Parallel imports are 52 This is sanctioned by Article 31 of the TRIPS Agreement which leaves it up to each member to decide on the grounds for the issuance of compulsory licenses. Common grounds for abuse in a pharmaceutical context could be inadequate supply of the market; desire to make fixeddose combinations of medicines owned by different right holders; desire to allow commercialization of a follow-on; dependent patent that is technologically important; desire to have redundant sources of supply to prevent stockouts and even a desire to promote local production where there have been failures in technology transfer from right holders. 53 Martin Khor Patents, Compulsory Licences and Access to Medicines: Some Recent Experiences (2009) 10 Intellectual Property Rights Series at Martin Khor above at 3.

9 allowed by the TRIPS Agreement, 55 as a form of exhaustion of intellectual property rights; and the Doha Declaration on TRIPS and Public Health affirms this by stating that each member is free to establish its own regime for exhaustion without challenge. 56 Very importantly, there is no need for an importer to obtain a compulsory license or to pay compensation to the patent holder in order to make use of parallel importation. 57 South African patent law does not provide for parallel imports and this omission is unfortunate. However, on a positive note, the South African Medicines and Related Substances Control Amendment Act 58 provides for parallel importation when it allows the Minister of Health to take action that results in the supply of cheaper medicines, by passing regulations that protect the health of the public. 59 The pertinent provision provides for the Minister to override exclusive patent rights 60 and to make use of parallel imports. 61 The provision relating to overriding patent right is couched in very wide discretionary language which led pharmaceutical companies to file a legal challenge to the provision in The case was later abandoned due to pressure from civil society and the international community. The provision relating to parallel imports is couched narrowly and it is submitted that a similar provision be included in the patents legislation to clearly show that parallel importation of patented products in other fields of technology apart from pharmaceuticals, is possible and sanctioned. In terms of the Regulations to the Medicines Act, there is some detail on how parallel importation may be embarked upon. 63 The Regulation specifies that under section 15C (b), medicines which can be imported are patented ones only. The same regulation also spells out what information may be included in the application for a license to parallel import medicines. The process of parallel importation of medicines is however complex, dealing with issues of safety, quality and efficacy, as well as affordability. By late 2013, no medicines have been imported into 55 See Article 6 thereof. 56 Martin Khor above at Ibid. 58 Act 90 of See section 15C paras (a) and (b) of the Act. 60 Section 15C paragraph (a). 61 Section 15C paragraph (b). 62 The pertinent case was Pharmaceutical Manufacturers Association of South Africa No v President of the Republic of South Africa, case No. 4183/98. For a comprehensive legal analysis of the case see Robert L. Ostergard JR The Political Economy of the South Africa-United States Patent Dispute (1999) The Journal of World Intellectual Property at Regulation 7.

10 the country using section 15C (b) under Regulation 7; probably as a result in large part of the difficult process that must be followed. On Government use of patents, the Patents Act notes that while patent rights are applicable against the state, a Minister of State may use an invention for public purposes on such conditions as may be agreed upon with the patentee. 64 If there is no agreement on such conditions, the commissioner of patents may determine them on application by or on behalf of such Minister and after hearing the patentee. 65 While this provision may be lauded as having a lot of potential for access to medicines, there is a problem in that the conditions of use have to be agreed upon by the patentee, failing which the Commissioner of Patents, who is usually a judge of the High Court sitting as a court of first instance, must determine the conditions. Just like in other instances when patents may be overridden in a legally sanctioned manner, 66 government use of patents, while taking into account the interests of the society and third parties, has not been considered to be unreasonably prejudicial to the interests of patent owners. 67 Government use of patents must be viewed as closely related to the acquisition of patents by the state, also provided for in the patents Act. 68 In terms of the relevant provision, the Minister may, on behalf of the State, acquire, on such terms and conditions as may be agreed upon, any invention or patent. 69 This provision, like the one discussed immediately above it, is problematic in that the terms and conditions have to be agreed upon with the inventor. This again ties the hands of the state. It is possible for inventors to view government acts falling into any of the above two categories as a disguised from of expropriation especially if the requirement to agree on terms and conditions with the right holder were eliminated. It is recommended that the Patents Act be amended 64 See section 4 of the Patents Act. 65 Ibid. 66 See Article 30 of TRIPS. Specific instances include research and experimentation, early working of a patent, prior use of a patented invention and temporary use on vessels, aircraft or land vehicles temporarily or accidentally entering the waters, airspace or land [this exception is expressed as an explicit obligation in Article 5ter of the Paris Convention]. 67 Taubman A, Wager H and Watal J (eds) A Handbook on the WTO TRIPS Agreement (2012) at See section 78 of the Patents Act. 69 Section 78 of the Patents Act.

11 appropriately to reflect the fact that the state may liberally make use of the above government use and state acquisition provisions even if no agreement has been arrived at with the right holder. Such forms of state action are permissible in terms of the TRIPS Agreement. 70 Although the TRIPS Agreement sets out the conditions governing both government use and compulsory licenses, one important difference is that government use of patents may be fast tracked because of the waiver of the requirement for prior negotiations with patent holders. 71 It is recommended that South amends the Patents Act accordingly to reflect this position. Although the term government is not defined in the TRIPS Agreement, the use is limited to public rather than private noncommercial use. 72 Public commercial purposes is also not defined in the TRIPS Agreement hence this leaves developing countries including South Africa with ample policy space to interpret the concept. 73 The provisions of the Patents Act dealing with the revocation of patents 74 may be used to ensure access to medicines by South African citizens. It is important to note that in terms of the relevant provision, any person may at any time apply in the prescribed manner for the revocation of a patent on any of the following grounds only. 75 If this provision is brought to the attention of members of the public and used, it can be a potent access to medicines weapon that can prevent the granting of evergreen patents. 76 An invention that is not new because it is a secondary new use patent cannot be new, neither can it involve an inventive step hence it should be refused, or if granted by mistake, revoked. It is recommended that any proposal for the reform of South African patent laws must certainly factor in the provisions of the current Act dealing with revocation of patents. Finally despite providing for a bolar exception to patent rights, South African patent law does not seem to provide expressly for a research and experimentation exception. The research and experimental use exception is aimed at ensuring that scientific research generating knew knowledge 70 See generally, Article 30 of the TRIPS Agreement. 71 See generally, Article 31 of TRIPS and specifically 30 (b) which exempts government noncommercial use from the obligation to negotiate for a voluntary license with the patent holder. 72 Pfumorodze above at The implication therefore is that public non-commercial purposes (emphasis added) could mean diverse things to different countries. 74 Namely section 61 of the Patents Act. 75 Section 60 (1). 76 One of the grounds on which an application for the revocation of a patent may be based is the fact that the invention concerned is not patentable in terms of section 25 of the Act [section 61 (3)].

12 is fostered and not impeded by patents. 77 This exception is longstanding and is justifiable on the basis that one of the main aims of patent law is to facilitate the dissemination of knowledge, promote innovation and facilitate the advancement of science. 78 This exception, which is in actual fact a TRIPS flexibility, is likely to be useful in spurring pharmaceutical technological processes when pharmaceutical companies and research institutes experiment with a patented medical invention in order to improve it or evaluate it to establish if it works. 79 There is a lot for South Africa to gain if the research exception is included in any future amendment of the Patents Act because this flexibility is WTO-legal since it is sanctioned by the TRIPS Agreement. 80 Conclusion This paper established that South African patent law is far from perfect when it comes to access to medicines issues. The major weaknesses in the law are that it allows evergreening, has weak provisions relating to requirements for patentability, does not provide for pre and post grant opposition to patents, has cumbersome provisions for compulsory licenses and does not provide for parallel imports and the research and experimentation exception. It is heartening to point out that the new Draft IP Policy currently under public discussion in South Africa unashamedly acknowledges the above mentioned weaknesses. South Africa is therefore doing something about the deficiencies in the law and this should be commended. As a valedictory recommendation, South is encouraged to take a cue from other SADC countries such as Zimbabwe, Botswana, Malawi and Zambia and incorporate all the TRIPS flexibilities in its pertinent legislation. Amendments to the intellectual property laws of South Africa, specifically patents, are awaited very eagerly by all and sundry. 77 Musungu S.F, Villanueva S and Blasetti R Utlilising TRIPS Flexibilities for Public Health Protection Through South-South Regional Frameworks (2004) at Ibid. 79 Ibid. 80 At least this is the interpretive result that one is likely to get when the broad objectives of Article 30 of TRIPS are contextually applied to developing countries and LDCs.